Coronavirus Job Retention Scheme Guidance (CJRS)
This is what many employers have come to know as the Furloughed workers scheme. Guidance for the scheme has been updated by HMRC and now provides more detailed information. This includes more information about who is able to claim under the scheme and what it means to furlough an employee. The new guidance suggests employers seek legal advice to ensure that you have performed the process correctly within the current employment laws, as it may affect your ability to make a successful claim under the scheme.
Making a claim under the Coronavirus Job Retention Scheme (CJRS)
The process is still to be finalised but it will be an online claims process and the claim will need to be made by the employer (so your accountant can’t make this claim for you). Latest HMRC can be found herehttps://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
A guide has been created to help with this whole process too, it can also be found on GOV.UK
You will need to access the claims process through your HMRC PAYE Online Account. If you don’t already have an account, then we advise you to sign up as soon as possible as the account takes about 10 days to be set up.
If you are a payroll client of ours and you don’t know your Employer PAYE reference number and PAYE accounts office reference number, then please e-mail us.
Director Salaries & Dividend payments
HMRC now confirms that the salary proportion of a director’s salary is eligible for a claim under the CJRS scheme, regardless of if they are the sole director or not. The are some specific conditions which you will need to adhere to for a successful claim:
- The director may carry out their statutory directorship duties. These are outlined in the Companies Act 2006. This means you are allowed to promote the success of the company.
- As a director though you must not undertake work that generates income for the company!
- The furlough must be documented in writing – that may mean you have to write to yourself!
- The furlough period must be at least 3 weeks
The process for making a claim will be on a self-assessment basis, however if you knowingly make a false claim will have committed benefit fraud which is a criminal offence. Point to note here …… it is rumoured that HMRC will make random checks including reviewing social media activity.
The dividend system of salary payments is based on ownership of shares and not undertaking of work. Therefore, you can still receive dividend payments (provided the company has the necessary reserves.)
Recording Grant Income
If you receive grant income through Small Business Rates Relief Grant or the Coronavirus Job Retention Scheme it needs to be recorded in your financial records as VAT free taxable income.
GOV.uk have also created a guide for Small Business Rates Relief Grant:
There is no update on the Self-Employed Income Support Scheme but that’s no surprise as the government have said this scheme will not be in place until June and then they will be contacting eligible people directly.
Coronavirus Business Interruption Loan Scheme (CBILS)
You may have seen on the news that lenders have been struggling the huge influx of CBILS enquiries. If you are considering applying there are some pre applications considerations that you need to take into account. Our advice is to ensure you check and have all the criteria covered before applying
- Business has been trading for at least a year
- 50% of turnover must be from trading
- Company accounts must be up to date
- Business must be viable and sustainable – Positive EBITDA
You must show that all other forms of grant and relief have been taken up, including
- VAT deferment
- Time to pay
- Coronavirus job retention scheme
- Rate relief grants
In addition, you must be able to show that the business has
- Renegotiated supplier agreements
- Deferred rent
- Demonstrated other cost cutting
The business must also show cash flow and P&L projections for a minimum of 12 months although ideally 36 months, and provide 6 months bank statements.
To help navigate what grants / loans are available we've created this simple flowchart for you. If you would like a larger copy of this please email us firstname.lastname@example.org